The Ministry of Business Innovation and employment NZ is moving to the building block method (BBM) adopted by the ACCC some years ago.There are several ultra-fast broadband providers in NZ and one of them also has a copper network with no decommissioning deadline. The Ministry is seeking views on how this wholesale sector should be regulated from 2020.
My submission suggests that the BBM is just one step towards the utility style regulation that it wants. NZ has the opportunity to also adopt utility style wholesale pricing which addresses its concerns about anchor products, encourages adoption and use of broadband networks while avoiding the mistakes made by Canada and Australia.
The submission can be accessed here: NZ-2016
This one page Economuse draws attention to the $3oom pa paid to Telstra for the “copper continuity obligation”, which maintains fixed copper services outside the NBN fixed network footprint. It suggests that changes to the definition of the USO and the growing availability of mobile services mean that there may be savings possible in a renegotiated contract. See Economuse 2016-07-14
In my previous column, I said I would explain how the discount rate might be set for a company with neither debt nor equity. The NBN is not quite the same but the same solution was used for it both by the ACCC and the BCR. Combining that information with the BCR’s estimate of the economic loss that the NBN incurs in supplying fixed wireless and satellite services, I find that that there is some evidence that the NBN is breaching competitive neutrality – i.e. competing unfairly. This issue was first raised by the NBN’s competitors in greenfield fibre sites and the issue is likely to arise again.
The most logical solution, it seems to me, is to write-down assets (and the corresponding amounts in the ICRA) so that the overall internal rate of return becomes commercial.
For more, see Economuse 2016-06-06
A maverick is a disruptive operator that forces incumbents to make non-trivial changes to their business models. The disruption can be through innovation or pricing.
The previous article explained how the UK and the European Union were prepared to block a merger of two mobile operators to preserve a maverick and competition.
Australia is a smaller market with fewer operators. But, there was a potential maverick internet operator in Farmwide, which was not nurtured as it might have been.
DISCLAIMER – I want to distance myself from the headline CommsWire put to my column. Farmwide was not murdered and indeed survives today; though not as an ISP.
To read about Farmwide, click Economuse 2016-05-27
This column discusses the importance of disruptive or maverick operators to drive innovation and price competition in mobile and fixed networks. Two days after the attached opinion piece was published in CommsWire, the European Commission supported Ofcom’s decision to block the merger of 3UK and O2; see
The opinion piece below also discusses the lack of competition in Australian mobile and fixed broadband markets. Ofcom’s research suggests that mobile prices may up to 20% higher than they could be in Australia.
For more, see Economuse 2016-05-09